Marketing

Question 1

What is branding

Answer 1

Branding: A way of making your product stand out from competition by using a particular colour, slogan, logo etc

Question 2

What is market research

Answer 2

Market Research: Collecting and analysing information on the market

Question 3

What is competing firms

Answer 3

Competing Firms: Other firms in the same industry selling similar goods or services

Question 4

What is marketing

Answer 4

Marketing: The process of getting the right product to the right people in the right place at the right price

Question 5

What is promotion

Answer 5

Promotion: Informing potential consumers about your product and persuading them that they want to buy it

Question 6

What are channels of distribution

Answer 6

Channels of Distribution: The way in which goods will be available to the customers – how they will get the goods to customers; for example, directly or through wholesalers

Question 7

What is marketing mix

Answer 7

Marketing Mix: The term used to describe the marketing choices made by a firm regarding product, price, place and promotion

Question 8

What is marketing plan

Answer 8

Marketing Plan: A part of a formal business plan which outlines how the firm will get the right good/service to the right people in the right way

Question 9

Difference between Advertising and Marketing

Answer 9

Marketing is the combantion of the 4P’s in order to help a consumer make a Purchasing decision. Where as buying and selling is just one aspect of a marketing Strategy.

Advertising is a part of marketing and it is used to create brand awareness and is a part of making a buyer buy a company’s product

Question 10

What is segmentation

Answer 10

The process of dividing your market into a distinct group of consumers i.e. targeting

Females 25-35
Middle Income
Healthy Lifestyle
Diet Coke

Question 11

What is unique selling point USP

Answer 11

Something different and special about your service and product that makes people choose it over your competition

Question 12

What is Product in the 4ps

Answer 12

This is the “thing” that companies sell in order to make a profit – it can be a product or a service (phones)

Question 13

What is the product life cycle

Answer 13

Introduction stage – The product is not officially on the market at this stage. Sales will start to grow slowly because of low product awareness – No profits at this stage. Introduction advertising is word of mouth – people telling others

Growth – sales start to grow rapidly supported by advertising. Profits start to be made. Competitors may enter the market with very similar offerings. Advertising spending is high and focuses upon building the brand.

Maturity – sales increase slowly now due to intense competition. A lot of advertising is used to maintain sales growth. Price wars and intense competition occur. Producers and companies begin to leave the market due to poor profit margins.

Decline – sales will decline as new products come along or the product has lost its appeal. The product will usually be withdrawn from the market as it becomes unprofitable to produce the product any further.

Question 14

What is Price in 4ps and why do we have pricing strategies

Answer 14

Price is what the business charges for a product or service. A business can adopt different pricing strategies for several reasons

Try to break into a new market

To try to increase its market share

To try to increase its profits

To make sure all its costs are covered and a certain profit is earned.

Question 15

Process of pricing a service/product

Answer 15

There are many steps to work through

Select the objectives for sales – know how much you want to sell

Estimate demand

Estimates costs of creating your product/service

Analyse competitors prices

Select a pricing method

Select the final price.

Decide on pricing strategies

Question 16

What are the pricing strategies

Answer 16

Cost-Plus Pricing

Involves estimating how many of the product will be produced, then calculating the total cost of producing this product and finally adding a percentage increase for profit

Advantages and disadvantages

Is easy to calculate

Possible loss of sales if the selling price is a lot higher than your competitor’s price.

Penetration Pricing

Strategy used when competitors have entered the market or are already in the market
Price is set low with the aim of establishing market-share for the product
Profits will be modest
With experience of production savings will be made, resulting in a higher profit margin.

Price Skimming

Strategy used for new products. Typically done by large companies that are well known
Price is set high (initially) to recover costs of research and development
Useful when competitors are not expected to enter market for a while
High price appropriate when a firm/product have a unique advantage

Competitive Pricing

Prices are set in line with your competitors or just below their prices. Examples = coke and Pepsi, similar products so prices are the same generally if there are not discounts. Always used for companies selling the same or similar product but with a different brand.

Sales are likely to be high as your price is at a realistic price level and the product is not under or over-priced

In order to decide what the price should be, you would have to research what price competitor are charging which costs time and money.

Promotional Pricing

Products are packaged together and sold at a price that is lower than the combined price of the products
Customers are encouraged to buy more
Customers perceive the “products” as being good value.
Generally done with small companies that are not as well-known and are trying to make a name for themselves.
They are generally done if the products put in the pack are not as good as their other products and cannot be sold so they are put in a pack with products that do sell so they can get rid of it while making a profit.
Promotional pricing makes you buy more of their products so they can get rid of it but profits are much lower.

Psychological Pricing

Price based on value placed on the item by consumers and amount they are likely to pay for it.
Price may reflect “Quality” or “Less expensive”
High price tags indicates higher quality
Used to trick the customer into thinking their expensive product is better than their cheaper product to make more profit.

Question 17

What is place in the 4ps

Answer 17

Place is about where your product will be distributed and sold. Place is where the customer can find your product or service. The place where you chose to sell your product must be appropriate in relation to cost and competition.

Question 18

What are distribution channels

Answer 18

Distribution Channels is how a product or service gets from the seller to the buyer. A distribution channel can have several stages depending on how many intermediaries (supermarkets, retailers) are involved in the chain – wholesalers, retailers, agencies, distributors.

                          Selling directly to consumers 

Producer ———————————————–> Consumer

                      Selling through retailers 

Producer —————————————> Retailer————-> Consumer

Producer ———-> Wholesaler———–> Retailer————-> Consumer

Producer —–> Agent —–> Wholesaler —–> Retailer —–> Consumer

Question 19

What is promotion in 4ps

Answer 19

Promoting your product and service to build brand awareness and become more popular

Question 20

What is target market and what is it seperated into

Answer 20

A target market is a group of customers that the business has decided to aim its marketing efforts at

Geographic – their location

Demographic – gender, age, income, occupation, education, household size

Psychographic – attitudes, values, lifestyles and religious values

Question 21

What is advertising, what are its methods and aims

Answer 21

Advertising is non-personal communication by the business to the target market. The business does not connect with the consumer.

Methods of Advertising are

Newspapers/Magazines

Radio
Television
Outdoor Displays – billboards
Direct mail – Letters, email
Online – Social Media

Aims of Advertising

To increase sales
To build brand awareness
To reach new target market
To persuade
To remind people they are still in the market

Question 22

What is sales promotion, its aim and methods

Answer 22

Sales promotion involves short-term tactics used to achieve sales. Methods of sales promotion are price reductions, samples, coupons, competitions and gifts with purchases.

Aims of Sale Promotion

To increase sales
Increase shelf space allocated by retailers to a brand’s display

Question 23

What are public relations, its aim and methods

Answer 23

Public relations include sponsorships and newsletters that create a feeling of goodwill around a product or service being promoted

Methods of Public Relations

Publicity - new items planted by the producer about an item or even in order to gain publicity.

Sponsorship - sponsorship of major events are an opportunity to create a favorable public image making people more inclined to buy the product.

Newsletters or magazines - allow a firm to communicate with staff, customers and suppliers. Magazine may write good reviews building better brand awareness and favorable public image.

Trade shows - business to business events attended by businesses in a specific market such as beauty, software, architecture and medical trade shows to show off new products and services

Question 24

What is personal selling

Answer 24

Personal selling is face-to-face communication that attempts to inform and persuade others to purchase the goods of the seller. Example is door to door selling.

Methods of personal selling

Door to door sales

Question 25

What is cost plus pricing

Answer 25

Cost-Plus Pricing

Involves estimating how many of the product will be produced, then calculating the total cost of producing this product and finally adding a percentage increase for profit

Advantages and disadvantages

Is easy to calculate

Possible loss of sales if the selling price is a lot higher than your competitor’s price.

Question 26

What is penetration pricing

Answer 26

Penetration Pricing

Strategy used when competitors have entered the market or are already in the market
Price is set low with the aim of establishing market-share for the product
Profits will be modest
With experience of production savings will be made, resulting in a higher profit margin.

Question 27

What is price skimming

Answer 27

Price Skimming

Strategy used for new products. Typically done by large companies that are well known
Price is set high (initially) to recover costs of research and development
Useful when competitors are not expected to enter market for a while
High price appropriate when a firm/product have a unique advantage

Question 28

What is competitive pricing

Answer 28

Competitive Pricing

Prices are set in line with your competitors or just below their prices. Examples = coke and Pepsi, similar products so prices are the same generally if there are not discounts. Always used for companies selling the same or similar product but with a different brand.

Sales are likely to be high as your price is at a realistic price level and the product is not under or over-priced

In order to decide what the price should be, you would have to research what price competitor are charging which costs time and money.

Question 29

What is promotional pricing

Answer 29

Promotional Pricing

Products are packaged together and sold at a price that is lower than the combined price of the products
Customers are encouraged to buy more
Customers perceive the “products” as being good value.
Generally done with small companies that are not as well-known and are trying to make a name for themselves.
They are generally done if the products put in the pack are not as good as their other products and cannot be sold so they are put in a pack with products that do sell so they can get rid of it while making a profit.
Promotional pricing makes you buy more of their products so they can get rid of it but profits are much lower.

Question 30

What is psychological pricing

Answer 30

Psychological Pricing

Price based on value placed on the item by consumers and amount they are likely to pay for it.
Price may reflect “Quality” or “Less expensive”
High price tags indicates higher quality
Used to trick the customer into thinking their expensive product is better than their cheaper product because it is off better quality since more expensive.